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Investors Should Consider
Effect of Inflation, Deflation

By

Karen Damato and

Theo Francis Staff Reporters of The Wall Street Journal

Updated Dec. 7, 2001 12:01 a.m. ET

Seasoned mutual-fund investors are more likely to fear inflation than they are deflation.

But amid the current economic recession, it is deflation -- a general decline in the price of goods and services -- that has been in the headlines. The Great Depression was the last time the U.S. experienced a serious bout of deflation. But the price of a barrel of oil has tumbled $10 in the past year, and the Labor Department reported last month that consumer prices for October actually fell about a third of a percent from the prior month's...